In 2021, the Central Bank of Nigeria banned cryptocurrency trading. Now, in 2023, on the eve of its departure, the Buhari-led government, with its history of being averse to crypto, surprisingly introduced a new law to tax gains on digital assets like cryptocurrency. The crypto tax comes from a series of amendments to the 2022 Finance Act. According to the Finance Act, there is now a 10% tax on profits on digital assets.
Section 3(a) of the Capital Gains Tax Act is amended by inserting the phrase “digital assets” after the word “debt” as follows: “Subject to any exceptions provided by this Act, all forms of property shall be assets for the purposes of this Act, whether situated in Nigeria or not, including options, debts, digital assets, and incorporeal property generally.” According to Adewale Ajayi, a partner at KPMG, digital assets include cryptocurrencies, non-fungible tokens, and other tokenised assets.
Although the amendment comes as a surprise to crypto traders, it has been in the works for a long time. Nigeria’s 2023 budget comes with a debt service cost of ₦6 trillion—31% of the budget—and a budget deficit of ₦11.34 trillion—more than 5% of the GDP. To remedy this, the government is looking for new sources of revenue, and with over $260 million worth of crypto transactions concluded last year, a tax on crypto assets might come in handy.
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